One of the primary business restructuring goals is the adjustment of a company’s burdensome obligations. If a business is going to be reorganized, matching a company’s obligations to its value is key to the rehabilitation and “fresh start” concepts that underpin the Bankruptcy Code. Determining that value is where concepts of valuation come into play, and the need for a valuation of a debtor’s business or assets arises at various points in the lifecycle of a restructuring: determining whether to sell or retain assets; considering adequate protection; in the grant of priming liens for a financing; whether postpetition interest is allowable; and in the plan confirmation process, among other situations. Continue reading If It Ain’t Broke, Don’t Fix It: ABI Commission Recommends No Change To Judicial Valuation
In this third and final instalment of our review of key issues concerning schemes of arrangements, we contrast schemes with US Chapter 11 proceedings. The shape of a restructuring is often influenced by a number of key factors; we highlight those that are most likely to be relevant.
Benjamin Franklin is quoted as having said “in this world nothing can be said to be certain, except death and taxes.” No offense to Mr. Franklin, but we had always thought that there was at least one other certainty in this world—in a bankruptcy case, creditors get paid pursuant to the priority scheme under section 507(a) of the Bankruptcy Code. It turns out, however, that Mr. Franklin was correct. In In re Jevic Holding Corp., the United States Court of Appeals for the Third Circuit found that in rare instances, a case arising under chapter 11 may be resolved through a structured dismissal that deviates from the Bankruptcy Code’s priority scheme. An overview of structured dismissals and a discussion of the Third Circuit’s analysis in this case as to whether such dismissals are generally permissible under the Bankruptcy Code is provided in Part I here. In this Part II, we discuss whether bankruptcy courts have the power to approve settlements, in the context of structured dismissals, which deviate from the priority scheme of the Bankruptcy Code. Continue reading In re Jevic Holding Corp. Part II: In a Close Call, Third Circuit Approves Settlement Agreement and Structured Dismissal that Deviate from Bankruptcy Code’s Priority Scheme
The Third Circuit’s recent holding in In re Jevic Holding Corp., raised a number of intriguing topics for us bankruptcy nerds so we could not resist taking a closer look at one of the issues presented in the case – structured dismissals. If you are not familiar with the concept, you are probably not alone, as the use of a structured dismissal as a means to exit bankruptcy is relatively uncommon. Although the main issue in Jevic Holding Corp. involved whether a settlement, which required a structured dismissal of the case, should be approved notwithstanding that its terms violated the absolute priority rule, we did not want to dismiss (pun intended!) the issue of permissibility of structured dismissals in a bankruptcy case. So we take this opportunity to provide an overview of structured dismissals and how they work in a bankruptcy case. Stay tuned for Part II of our In re Jevic Holding Corp. case study where we’ll examine the Third Circuit’s ruling with respect to deviations from the Bankruptcy Code’s priority scheme. For now, though, we’ll turn to structured dismissals. Continue reading In re Jevic Holding Corp. Part I: Third Circuit Authorizes Structured Dismissals in Limited Circumstances
This is the fifth post in our Bitcoin Bankruptcy series on the Weil Bankruptcy Blog. We have concluded that a hypothetical U.S.-based bitcoin exchange likely would not constitute a stockbroker or a commodity broker under the Bankruptcy Code. Therefore, unless the bitcoin exchange is a certain type of bank, it is probably eligible for chapter 11 relief. This entry explores the question of whether a bitcoin exchange might be considered a bank. Continue reading
Banks and Bitcoin Exchanges
This week, the Weil Bankruptcy Blog premieres a new series, “Lookback Period.” In these entries, we will periodically review and summarize the hot topics on which we have been writing over the last couple of weeks. We thought this might be an easy way on a summer Friday (or a rainy weekend) to catch up on what you might have missed in the Weil Bankruptcy Blog. Continue reading Lookback Period: Two Weeks
The United States Court of Appeals for the Seventh Circuit recently held that numerous forbearances by a lender that allowed a single asset real estate borrower to stave off bankruptcy for four years provided value in the context of a constructive fraudulent transfer action. 1756 W. Lake St. LLC v. Am. Chartered Bank (In re 1756 W. Lake St. LLC), Case No. 14-1869 (7th Cir. May 15, 2015). The decision in Lake Street recognizes that a lender may, under certain facts and circumstances, provide real value when it extends a lifeline to the borrower in the form of forbearance. The trick, however, may be putting a price tag on that value. Continue reading Everything Has Its Own Value: 7th Circuit Holds That Forbearances by a Lender May Be Considered When Determining Reasonably Equivalent Value